Oil prices extend gains as OPEC cuts output forecast

Oil prices advanced further on Monday as OPEC forecast a reduction in annual US output amid a dip in North American crude production.

US benchmark West Texas Intermediate (WTI) for delivery in March jumped $1.51 to $53.20 a barrel compared with Friday's close.

Brent North Sea crude for March won 59 cents to stand at $58.39 a barrel in late London trade.

Last week saw WTI surge seven percent and Brent add 9.4 percent, their best weekly gains since February 2011.

Oil prices won a further boost Monday "after OPEC lifted its non-OPEC supply forecast for 2015", said Jasper Lawler, analyst at dealing group CMC Markets.

"OPEC's forecasts maybe self-serving but this latest one does have some basis in fact. The US rig count has been coming down and most major oil companies have announced" cuts to expenditure, Lawler said.

The Organization of Petroleum Exporting Countries on Monday forecast non-OPEC oil supply growth of 850,000 barrels per day for 2015, down from its previous estimate and led by a cut in US output.

A survey by US oil services firm Baker Hughes Inc released Friday showed that the number of rigs drilling for oil in the United States fell by 83 to 1,140 in the week to February 6. The dip followed a cut of 94 rigs the previous week.

Bloomberg News reported that the rig count was standing at its lowest level since December 2011.

The drop, coupled with announcements of deep cuts in capital spending by major oil companies, suggests tighter supplies in the future.

Oil prices are down by about 50 percent from their June peaks, largely owing to a surge in global reserves boosted by robust production of oil from US shale rock.

The problem was exacerbated in November after the OPEC cartel insisted that it would maintain output levels despite plunging prices, in a bid to maintain market share. The 12-nation group pumps about 30 percent of global crude.